Scotland stands to lose its first-mover advantage in floating wind and the chance of building a new energy supply chain unless the UK government extends the deadline for its Renewable Obligation Certificate (ROC) subsidy scheme.

With the world’s first floating wind farm, Statoil’s 30MW Hywind Scotland, and three consented projects at an advanced stage of development, the nation was seen as the global leader in the field. But the budding sector now faces considerable uncertainty after UK ministers rejected overtures from the industry — and the devolved Scottish government — to extend the October cut-off.

Delays to two proposed floating wind farms — 2-B Energy’s up-to-60MW Forthwind in the Firth of Forth and Hexicon’s 10MW Dounreay Trì off Caithness — mean they will not qualify for ROCs as they will not be able to get steel in the water in time.

A third project, the 50MW Kincardine wind farm, being developed Pilot Offshore Resources and ACS Cobra Wind 15km southeast of Aberdeen, is expected to duck under the ROCs deadline by mooring a first 2MW “scout” unit this summer — even though the project is slated to use 8MW-plus machines.

“We have a great opportunity to increase our expertise in floating wind by building out the next three projects, helping us to retain our global advantage in this innovative technology, says Maf Smith, deputy chief executive of RenewableUK.

“That’s why we urgently need the government to extend the ROC deadline [to April 2020] — just for these three projects – so that we don’t risk forfeiting our pole position. France, Japan and the US are also looking at opportunities to develop floating wind.”

Scottish Renewables chief executive Claire Mack tells Recharge that as the windiest country in Europe, with some of the deepest waters and most promising offshore wind sites, Scotland is perfectly placed to capitalise on floating wind technology.

“Further deployment would help lower costs for this young sector, increasing the opportunity for Scotland to take advantage of a significant future global market,” she says.

RenewableUK has formally submitted a proposal to extend the ROC deadline to the Department of Business, Energy & Industrial Strategy, but a ministry spokesman tells Recharge: “We do not intend to amend secondary legislation to extend the length of the grace periods.”

Energy minister Claire Perry adds: “The intention is to stick with the current deadline date on the basis that there has been quite a lot of lead in time for this particular proposal.”

The Scottish government is not impressed. “If powers were in the hands of Scottish ministers, the flexibility asked for would be provided,” says Scottish energy minister Paul Wheelhouse.

Dutch OEM 2-B Energy’s 12MW, two-turbine Forthwind demonstration project will miss the ROC deadline due to a nine-month delay caused by the lengthy judicial review over the planning consent for four other offshore wind farms in the Firth of Forth. The case, brought by bird charity RSPB was finally settled in the industry’s favour last November.

“I think governments have to draw a distinction,” says 2-B commercial manager Scott Harper. “We are not a large-scale project developer, but a technology company trying to take our innovation to the market to demonstrate much lower costs for offshore wind in the future.

“And if I [have] read the UK government’s industrial strategy correctly, then what we are doing in floating wind is ideally just what they would like us to be doing.

“So the question is whether we can leverage some alternative form of finance that will give us the lifeline we need in order to make our technology attractive.”

Analysis by renewables consultant BVG Associates concludes that a fully developed Forthwind project could be worth over £160m ($223m) to the UK economy, with around 70% of the contracts awarded to the UK supply chain and around 60% of that to Scottish businesses.

Marcus Thor, project director at Sweden’s Hexicon, tells Recharge that “all the ongoing pilot projects in UK waters are important in driving forward an industry by deploying a variety of technologies”.

“The industry needs full-scale projects in the water which will provide learnings that will enable floating wind to keep up with the cost reduction pace seen in conventional offshore.”

The project company, Dounreay Trì Ltd, which is wholly owned by Sweden’s Hexicon, fell into administration last July and the project was subsequently put up for sale.

Advocacy group Friends of Floating Offshore Wind has called for discussions with the UK government to see if the sector could benefit from energy secretary Greg Clark’s forthcoming industrial strategy plan, and perhaps get floating wind incorporated into a new “innovation” basket within the country’s Contracts for Difference (CfD) scheme, which replaced ROCs.

“While floating offshore wind will be able to build on the achievements of fixed offshore wind, some support is required to reach this point, as has been the case for all emerging technologies,” the group says in a statement.

“The employment and industrial opportunities offered by floating offshore wind [over the long term] far outweigh the [short-term] costs. A lack of any follow-up support mechanism, after ROCs, will result in the industry turning to other markets — France, Norway, and Japan — where floating wind is being strongly supported.”

The UK low-carbon business development body Carbon Trust says Scotland is perfectly positioned to capitalise on floating wind deployment given the experience and capabilities in the oil & gas sector.

“Particularly given the decline in North Sea oil & gas activity in recent years, offshore wind could offer a lifeline for companies looking to diversify into renewables,” Rhodri James, policy and innovation manager at the Carbon Trust, tells Recharge.

“A more critical need for the industry [than an ROC deadline extension] is a route to larger-scale commercial projects, which would make the UK the most attractive market for this technology. This requires longer-term support beyond the closure of the ROC regime to help create a pipeline of opportunities for UK suppliers and provide the confidence and visibility needed to attract inward investment.

“The current CfD mechanism in the UK has proved effective in stimulating competition and driving down costs for several energy technologies, including bottom-fixed offshore wind.”

However, James points out that the competitive nature of the existing technology pots will make it difficult for floating wind and other nascent technologies to secure contracts ahead of more mature technologies.

“One potential solution could be to ring-fence a portion of the available budget for more innovative technologies, which would provide a vital route to market for energy technologies that have the potential to deliver steep cost reductions in the not-too-distant future,” he says.

“A capacity or budget-constrained pot of funding would help to control government spend whilst ensuring that competition still exists to drive down cost and maximise value for money. Directing just a small share of the overall budget, or from any budget underspend, could have a big impact in ensuring that the UK remains at the forefront of the floating wind industry.”

Smith agrees. “The supply chain contracts for the next three floating offshore wind projects alone are worth at least £200m to the UK — but that would be the start of what could be a multi-billion pound opportunity for the UK,” he says.

“In the global market, 80% of Europe and Japan’s offshore wind resources are in seas over 60 metres deep, so they can only be harnessed using floating technology. Just pause for a moment and think about how much capacity that could add to our energy system. It’s enormous — and so are the supply-chain opportunities for UK companies.”

Wind

The threat to the Scottish floating wind industry